Anger as newly-honoured billionaire brothers who bought Asda for £7bn head for Jersey tax haven
The billionaire brothers who bought Asda for £7billion were last night facing questions over their decision to transfer ownership of the British supermarket to a controversial tax haven.
Under the deal struck by Mohsin and Zuber Issa, who were made CBEs in the Queen’s Birthday Honours list, the grocer will be legally controlled by a parent company based in Jersey.
Experts yesterday said there were several benefits to operating from the Crown dependency, which charges a corporate tax rate of zero.
Mohsin, left, and Zuber, right, Issa, billionaire brothers behind a £7bn bid for Asda, will transfer ownership of the British supermarket to Jersey
It would also mean the parent company does not have to disclose its accounts publicly, and the Issas would pay no capital gains tax if they decided to sell Asda at any time.
But the move could prove controversial after Jersey was accused of being ‘up there with the worst’ of the world’s tax havens.
The jurisdiction was ranked seventh in the world in a list of the most ‘aggressive’ havens in a report by the Tax Justice Network last year, behind the Cayman Islands, the British Virgin Islands and Bermuda.
Haven: The Issa brothers’ stake in their petrol forecourt business, EG Group, is already held through a Jersey-based company
Labour MP Margaret Hodge, former chairman of Parliament’s public accounts committee, said yesterday: ‘Why on earth would the parent company of Asda choose not to be incorporated in the UK?
‘The answer must be that there is a lax regulatory approach in Jersey which, at best, facilitates tax avoidance.
‘Having your business based in what is a British tax haven simply means that no one can trust that you are paying a fair amount of tax on profits you earn from business you are undertaking in the UK.’
The Issas’ stake in petrol forecourt firm EG Group is held through a Jersey-based company.
George Turner, director of Tax Watch UK, said that one key advantage of this structure is that a business can acquire assets by borrowing large amounts of money, then sell those assets on for a higher price in future but pay no capital gains tax. If that is their intention, then it is a loop hole that HM Revenue & Customs really needs to close.’
A spokesman for the brothers insisted that Asda ‘will remain tax-resident in the UK and will pay all taxes that are due’.